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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.



Seeking the Slack

Where is the excess slack in the labor force?

Last week, the April Employment report from U.S. Bureau of Labor Statistics reported that the unemployment rate (U-3) edged down slightly to 5.4 percent (after rounding) over the prior month, which is well below the high of 10.0 percent in late 2009. Despite this encouraging improvement, wage growth remains low, and many agree that slack remains in the labor market. The consensus of the Federal Open Market Committee (FOMC) has been that more progress can be made, as noted in the Chair’s press conference in March. One factor we have been paying particular attention to here at the Atlanta Fed is excess slack in the labor market captured in the U-6 unemployment rate, which includes the unemployed, those who are working part-time but would prefer full-time employment (part-time for economic reasons, or PTER), and those who have stopped looking for work during the last 12 months but were willing to work (marginally attached).

Below is a chart showing the U-3 unemployment rate (depicted in blue) and the U-6 rate (in red). The difference between the two is often referred to as “the gap,” and this area shaded below in light red represents the excess slack in the labor force. Between 2000 and 2008 the gap averaged 3.7 percentage points but then rose to a high of 7.3 percentage points during the recession. Since late 2011, the gap has declined and was 5.4 percentage points in April, but it remains well above the usual amount of excess slack in the labor force experienced earlier in the decade. Earlier analysis by my Atlanta Fed colleague Pat Higgins identified a significant connection between U-6 and the subdued wage growth the economy has experienced in recent years.


Just as the U-3 unemployment rate varies widely across states, so too does U-6.

Below is a map that shows where the gap between U-6 and U-3 was greatest during the first quarter of 2015. States shaded in red have a gap higher than the United States overall, and states with a lower-than-average gap are shaded in green.

Twenty-one states are shaded red, and they are mostly concentrated along the West Coast, the Southeast, and the Great Lakes region. The gaps were largest in Arizona, Nevada, and California, respectively—the so-called Sand States—where the housing boom and bust were most dramatic.

The gap was below the U.S. average in 29 states and Washington, DC. Notably, the central part of the country is shaded green. The smallest gap is in North Dakota, South Dakota, and Wyoming, states that have benefited in recent years from a boom in mining activity or energy extraction.

Of course, a large or small gap relative to the U.S. average does not tell us if the gap is unusual. For example, the red states in the chart also tend to be states whose U-3 rate and U-6 rate are also above the U.S. averages.

A way to get a sense of whether the gaps are abnormally high is to compare the gap on a state-by-state basis with that state's average gap prior to the Great Recession. (Here, I use data from 2003 to 2007 to create a prerecession baseline for each state.) As the map below shows, most states remain above their prerecession average gap and are shaded red, although a few exceptions are shaded green and sit slightly below the prerecession average. Nevada and Arizona's gaps remain stubbornly high and actually worsened in the latest quarter.

Clearly, many states have a ways to go to attain the average labor market conditions they experienced prior to the Great Recession.

Photo of Whitney MancusoBy Whitney Mancuso, a senior economic analyst in the Atlanta Fed's research department

May 19, 2015 in Employment, Labor Markets, Recession, Unemployment | Permalink


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Charting Employer Sentiment in the Southeast

In a recent speech, Atlanta Fed President Dennis Lockhart remarked, "Overall, there was more improvement in labor markets in 2014 than in any other year of the recovery. Employment conditions are improving, and improving faster, and prospects of continued progress are encouraging moving into the new year."

Although President Lockhart was referring to national labor market conditions in his speech, his assessment holds true for the Southeast as well. In 2014, the Atlanta Fed's Regional Economic Information Network (REIN) staff polled business contacts across the Southeast both at the beginning of the year and the end to get a sense of their hiring plans for the year ahead. Polling our contacts twice allowed REIN to gauge whether business hiring plans had changed during the course of the year, and we shared the January results with you. Fast-forward to last November, when we approached our contacts to ask the same set of questions. We were pleasantly surprised to see that the results were more upbeat.

The survey was conducted from November 10–19 and resulted in a total of 303 responses from a wide variety of firm types and sizes. In this post, we want to share the results as well as some comparisons over time.

The survey's first question asked contacts whether they expect to increase employment, leave employment unchanged, or decrease employment in 2015. The results showed that 59 percent of respondents said they planned to increase employment levels over the next 12 months; up from 46 percent in January and the highest reading in the six times we've conducted this survey. Another 31 percent indicated they planned to leave employment levels unchanged; down from 44 percent in January and the lowest reading since we began asking these questions in 2011. The remaining 10 percent of participants planned to decrease payrolls; unchanged from the beginning of the year. As the chart below shows, a noticeable shift in sentiment took place from January, when we last asked this question. It appears that firms that said they would leave employment levels unchanged are now saying they would increase employment.


Focusing on the 59 percent of firms that indicated that they planned to increase employment, we asked them to give us the top three motivating factors driving their decision. The most frequently cited reasons were similar to past results. The majority of firms cited high expected growth of sales as the most important reason for increasing employment. For the second most important factor, two selections garnered similar levels of response: current staff was overworked, and the firm needed skills not currently possessed by existing staff. Finally, the third factor was improvement in the firm’s financial position (see the chart).

Conversely, we also wanted to learn the top three factors restraining hiring. Similar to January, firms' primary concern remained their need to keep operating costs low. Other frequently selected reasons were the firms' inability to find workers with the required skills and uncertainties related to regulations or government policies. What stood out this time was that a larger share of firms said that they were unable to find workers with required skills: 13.8 percent in January compared with 21.0 percent in November. Also, fewer contacts said that expected sales growth was low: 15.2 percent in January compared with 9.7 percent in November. Additionally, uncertainty about health care costs subsided; a smaller share of firms noted this factor as a reason for not hiring (see the chart).

In short, it's clear that employment levels in the Southeast should improve this year, which is exactly what we said this time last year. Were we correct for 2014? Now that we have data in hand, let's see. According to the latest employment data from the U.S. Bureau of Labor Statistics, the district averaged 38,800 net payrolls per month for 2014, up from 33,600 net payrolls a month in 2013. So our contacts did, in fact, increase payrolls like they said they would last year. Let's see what happens this year!

Photo of Shalini PatelBy Shalini Patel, a REIN director in the Atlanta Fed's research department

February 3, 2015 in Employment, Jobs, Recession, Southeast | Permalink


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Jobs Increase (But So Does Unemployment)

The most recent state-level labor market data from the U.S. Bureau of Labor Statistics were mixed, with one report noting an increase in employment and another indicating a rise in unemployment.

Payroll survey
Last month the Sixth District states added 27,100 net new payrolls, matching the revised June figure and just slightly below the 2014 monthly average of 28,600 net new payrolls. The only state that subtracted payrolls was Florida, which shed 1,600 payrolls (see the chart).


Most of the District gains came from the construction sector (up 12,100), which corresponds with the results of the Atlanta Fed's most recent poll of southeastern business contacts engaged in commercial construction (we recently discussed that poll's results). Other major regional payroll contributors were leisure and hospitality (up 6,700) and education and health services (up 6,500). Two sectors—government employment and manufacturing—subtracted payrolls from total District figures. Government (down 11,100) was the only sector where payrolls declined in all states, and most of the decline came from local government. Regional manufacturing also declined by 1,600 payrolls, but Florida represented most of the District's manufacturing loss, shedding 2,900 jobs.

Household survey
On the other hand, last month's unemployment data told a different story in the Sixth District. Although the aggregate unemployment rate ticked up 0.2 percentage points to 6.7 percent in July, three of the six states in the Atlanta Fed's district (out of a total of seven nationally) had fairly notable increases. Georgia's unemployment rate increased to 7.8 percent from 7.4 percent in June, Louisiana's increased to 5.4 percent from 5.0 percent, and Tennessee led the nation with the largest month-over-month increase: one-half of a percentage point, rising to 7.1 percent in July (see the chart). In all three of these states (plus Mississippi), the unemployment rate rose for the third straight month. Mississippi had the highest unemployment rate in the nation in July (at 8.0 percent), and Georgia had the second-highest rate at 7.8 percent. This steadily increasing unemployment across states bears watching as we enter autumn.


We'll see what story (or stories) August data tell us when the next regional employment release comes out on September 19.

Photo of Chris Viets By Rebekah Durham, economic policy analysis specialist in the New Orleans Branch of the Atlanta Fed

September 2, 2014 in Employment, Labor Markets, Recession, Southeast, Unemployment | Permalink


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Sunnier Times in the Sunshine State

During the most recent cycle of the Federal Open Market Committee (which ran from June 19 to July 30), the Atlanta Fed’s Regional Economic Information Network (REIN) team at the Jacksonville Branch talked with more than 30 Florida business leaders, including branch directors, about economic conditions. As one who has been involved with the REIN program since its inception in 2008, I can attest that, while “slow and steady” remains a theme in this economic recovery, the sentiment of our contacts over the past two months has been the most upbeat since before the recession.

General business conditions
Almost all firms reported increases in business activity. Two design/build firms indicated robust demand and reasonably strong pipelines, including a strengthening in industrial and office development. For the first time, we heard of some speculative building in the commercial sector from three different contacts. Housing continued its slow improvement, though several contacts used the word “bumpy” to describe activity. The appetite for auto purchases continued, as a recent SouthPoint post discussed, with lenders citing robust auto-lending activity. Some banks also reported that consumers are now slowly adding to outstanding credit card balances.

Employment and hiring
Labor markets tightened as the number and types of difficult-to-fill positions increased. In addition to highly skilled positions that are normally a challenge to fill (including information technology and engineering), contacts shared frustrations with filling midlevel positions such as analysts. In construction, finding subcontractors and skilled laborers was harder than normal. However, one contact saw a 20 percent annual increase in revenue as clients resumed a normal hiring pace.

Labor and input costs
Contacts reported seeing wage pressures in their organizations. For example, demand for truck drivers that one firm described as “significant” led to a 33 percent pay increase since the beginning of 2014. One retail contact reported wage increases for maintenance positions as the “construction boom in the area lures these workers away.” Most contacts previously noted merit programs of between 2–3 percent. However, for the first time, several contacts discussed plans for more aggressive increases of 4–5 percent. Regarding health care, most anticipate premiums to continue growing significantly, and many have self-insured to mitigate rising costs.

Most contacts described nonlabor input cost increases as benign. Although the cost of some construction-related materials was a cause for concern earlier this year, most of this volatility has dissipated. While most contacts do not claim much pricing power, some companies are seeing improved margins as they are able to push through increases in the form of higher sales prices.

Credit and investment
Contacts at medium and large companies noted that while credit is readily available, many are still risk-averse and avoiding taking on debt, relying instead on cash flow or internal reserves to fund projects. Companies that do borrow are undergoing “rigorous but rational underwriting.” One construction contact said that many of his larger clients are no longer just catching up from the recession but are now willing to take risk and invest in adding capacity. A bank also reported more risk-taking among customers, especially in commercial real estate and equipment leasing. At the consumer level, real estate agents and lenders referred to qualified mortgages as something of an impediment to mortgage loan activity, but they generally viewed the more rigorous process as worth the effort to reduce risk.

Since June, the consensus from REIN contacts at the Jacksonville Branch was largely positive. Overall demand conditions have improved, though some expressed concerns about regulatory impact. Some contacts specifically mentioned dissipating headwinds as a reason for increased investment, including one contact who sees enough improvement in the economic environment that the company has changed its strategy from diversification to more rapidly expanding its footprint with aggressive new revenue goals.

Does this jibe with what you, our readers, are seeing? As always, your thoughts are welcome.

By Sarah Arteaga, a Regional Economic Information Network director in the Atlanta Fed's Jacksonville Branch

August 6, 2014 in Economic conditions, Employment, Florida, Health Care, Jobs, Labor Markets, Recession, Recovery | Permalink


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A Closer Look at Progress in Selected Southeastern Labor Markets

The U.S. Bureau of Labor Statistics compiles unemployment rates at the county level, which allows a glimpse of how local labor markets are performing. The interactive map of the Southeast below depicts the progress across the region since the second quarter of 2009, which the National Bureau of Economic Research defines as the end of the most recent recession.

Areas in southern Louisiana stand out as having had low unemployment even in 2009, thanks in large part to the strength of the energy sector and continued post-Katrina development. Fast-forward to 2014, and we also see considerable improvement in other areas. But some parts of the Southeast are still struggling with high unemployment.

Although the map shows improvement since the end of the recession, it doesn’t show whether we are back to normal, or even what “normal” looks like. Are local labor markets as strong as they were before the recession? Drilling down a bit more, we separated counties into two categories: those defined as a metropolitan statistical area (MSA) by the U.S. Census Bureau, and those not defined as an MSA. Those counties within an MSA are typically more urban and densely populated, and non-MSA counties tend to be more rural and less populated. In the chart below, we have calculated the unemployment rate for both MSA and non-MSA counties. The size of the bubble represents the size of the labor force, and the solid lines show the national average unemployment rate in each of the two time periods.

In 2007, non-MSA counties in Georgia, Tennessee, and Mississippi had unemployment rates above the 2007 average, whereas all but Mississippi had MSA unemployment rates below the national average. In 2014, unemployment in non-MSA counties in Alabama, Georgia, Tennessee, and Mississippi was above the national average, and all but Georgia had MSA unemployment below the national average. So, above-average unemployment is generally more prevalent in non-MSAs than in MSAs, seemingly a persistent problem. (Florida and Louisiana are the two exceptions in the region, with average or below-average MSA and non-MSA unemployment rates before and after the recession.)

Another way to gauge labor market strength is to measure job growth. Generally speaking, unemployment and job growth move in opposite directions, although declines in labor force participation can also cause the unemployment rate to decline even without strong job growth. In the chart below, to view how MSA and non-MSA counties fared across states, we have plotted year-over-year employment growth in 2007 (prior to the recession) against growth for the year ending with the first quarter of 2014. Once again, the size of the bubble represents the size of the labor force in 2014. We see that across the region, employment growth was weakest among non-MSA counties in both periods, but employment growth was generally stronger among MSA counties in both periods (although only MSA counties in Florida and Louisiana experienced above average employment growth in 2007 and 2014).

The unemployment map demonstrates that labor market conditions have improved in most parts of the Southeast since the end of the recession. However, many smaller rural communities continue to struggle with higher levels of unemployment and weaker employment growth than their big-city neighbors.

Photo of John RobertsonBy John Robertson, a vice president and senior economist, and

Photo of Whitney MancusoWhitney Mancuso, a senior economic analyst, both of the Atlanta Fed's research department

July 22, 2014 in Employment, Jobs, Labor Markets, Recession, Southeast, Unemployment | Permalink


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Separating Out Job Groups in the Sixth District

There’s been a lot of discussion about the decline of jobs considered to be “mid-skilled” during the last several years. A recent Regional Economic Press Briefing prepared by our friends at the New York Fed took another look at this important issue. They aggregate occupations into three skill categories: higher-skill, middle-skill, and lower-skill professions. The specific occupations of each category are outlined in the following chart:


Using data from the U.S. Bureau of Labor Statistics’ Occupational Employment Statistics dataset, we were able to decompose the Sixth District states’ labor markets using the same skill categories that the New York Fed used.

Both the higher-skill and lower-skill categories grew from 2007 to 2013, and the middle-skill group shrank for both the United States and Sixth District. The proportion by which the middle-skill group’s share shrank during the time period was roughly similar for the nation and Sixth District, with the difference between the two differences being less than 1 percentage point. Yet more interesting, we were able to compare how these groups’ compositions have changed prior to and following the recession for each Sixth District state. You can see a state-by-state decomposition in the following chart:

Florida, Georgia, and Tennessee all saw their share of their middle-skill jobs shrink by roughly 4 percentage points during the time period, while Alabama’s share of middle skill jobs decreased by about 3 percentage points. The middle-skill groups in Louisiana and Mississippi, often the outliers in Sixth District data, shrank by the smallest amounts during the time period 2007–13, roughly by 2 percentage points. However, Louisiana’s share of higher-skill occupations was the only one not to expand from 2007 to 2013. The shrinking share of middle-skill jobs in that state was almost solely the result of a growing share of lower-skill jobs.

To understand how the data in the chart above came about, we can look at changes in the composition of these groups (higher-, middle-, and lower-skill groups) by state during both the recession and recovery. The first chart below shows that the middle-skill groups took a particularly hard hit across the nation and District in the previous recession...


...while those middle-skill jobs have been the most sluggish to come back, both across the nation and the Sixth District, as the following chart shows:


By Mark Carter and Sandra Ghizoni, both senior economic analysts in the Atlanta Fed’s research department

July 3, 2014 in Employment, Jobs, Labor Markets, Recession, Recovery, Southeast | Permalink


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Middle Tennessee Economy Slogging Along, but Bright Spots Emerging

Along with the rest of the state, Middle Tennessee's economy has been growing slowly since the end of the recession. Unemployment rates across the mid-state remain stubbornly high, but there are some positive signs appearing in manufacturing and housing.

On Friday, September 21, I attended the annual Middle Tennessee State University (MTSU) Economic Outlook Conference hosted by the MTSU Business and Economic Research Center. The center also happens to be a member of the Atlanta Fed's Local Economic Analysis and Research Network (or LEARN) program. The center's director, Dr. David Penn, offered his views on where Tennessee and the Nashville economies are headed.

Dr. Penn's presentation covered labor markets, manufacturing, housing, and state sales tax revenues. While there was some good news, I'll start with the not-so-good news.

There is an old saying: "You're moving slower than pond water." This saying could apply to the unemployment rate in Tennessee because it is not coming down very fast. Although Nashville is still generating jobs, this job generation is at a painfully slow pace. The metro area's seasonally adjusted total employment level is only up by 1,000 compared to a year ago (through August). Construction employment in Middle Tennessee has cooled off considerably, and several months of negative job growth in the education and health care sectors along with the government shedding jobs has largely offset gains in other sectors. The manufacturing sector of the job market has been rising consistently over the year. Professional services and the leisure and hospitality sectors are also demonstrating steady job growth. Durable goods manufacturing has been especially strong.

This is certainly not applicable to every part of Middle Tennessee, as some areas have already recovered from job losses experienced during the recession. Clarksville, for example, has done quite well, as they now exceed their prerecession employment level, and Nashville is getting closer to regaining all jobs lost during the recession.

The current rate of unemployment in the Nashville metro area has dropped from 8 percent to 7 percent on a seasonally adjusted basis, but has ticked up from 6.5 percent in April. One reason for the recent uptick in Nashville's unemployment rate is that the number of people reentering the labor force has increased sharply since the first quarter of the year.

On the brighter side, Dr. Penn stated that the state's housing market is getting better. The Nashville housing market is experiencing price growth for the first time since 2008. The city has seen home sales rise 27 percent over last year's low levels. As a result, the sales of building materials have risen. In addition, Nashville's sales tax collections are higher now than before the recession; however, inflation-adjusted purchasing power is 6.8 percent lower.

In the end, Dr. Penn's near-term expectations are for slow employment growth, a slower rise in the rate of sales tax collections, mild increases in construction activity, and a drifting down of the unemployment rate. Not the rosiest of forecasts, but it could be a lot worse.

By Troy Balthrop, REIN analyst at the Nashville Branch of the Federal Reserve Bank of Atlanta's Nashville Branch

October 4, 2012 in Economic Growth and Development, Recession, Recovery, Tennessee | Permalink


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The Great Rebalancing: State and local government fiscal challenges

Earlier this week, Federal Reserve Bank of Atlanta President Dennis Lockhart spoke in West Palm Beach, Fla., about the current phase of American economic history, which he termed the "Great Rebalancing." (In his remarks, Lockhart noted that he borrowed this term from a reference to the economic recovery in Britain.) Lockhart sees three rebalancing processes now under way: rebalancing of consumption and savings, regulatory rebalancing, and fiscal rebalancing. With regard to the latter, he noted that

"Spending cuts have begun at all government levels, and some improvement in revenues is now being reported. The extent of cuts is being discussed, quite literally, as we speak."

While, as Lockhart noted, it is too early to determine the outcome of overall fiscal rebalancing at the national or state level, we can look at public sector employment at the state and local levels to see where some of this rebalancing currently is taking place. State and local employment data through February show that the number of public sector workers (excluding federal employment) has been on the decline for some time, while private sector employment is increasing.

Employment in Sixth District States
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With regard to improvements in revenues, the data are more clear. Looking at the states in the Southeast, revenues are indeed on the upswing.

Tax Revenues in Sixth District States
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A recent report by the Nelson A. Rockefeller Institute of Government, written by Lucy Dadayan, senior policy analyst, and Donald Boyd, senior fellow, confirms that

"After the deepest recession since the Great Depression, most states are now on the gradual road to tax revenue recovery."

President Lockhart's view that fiscal rebalancing lies mostly ahead of us is confirmed by the Rockefeller Institute authors, as they caution that

"Broad state fiscal conditions remain fragile. The longer-term outlook is still ominous due to record revenue declines during the Great Recession, spending trendlines still pointing upward, and unemployment rates remaining nearly double their prerecession levels, to name a few. While some economic indicators signal improvement in overall conditions, fiscal recovery for the states typically lags a national turnaround and is likely to take several years."

Photo of Michael ChrisztBy Mike Chriszt, an assistant vice president in the Atlanta Fed's research department

April 7, 2011 in Economic Growth and Development, Fiscal Policy, Recession, Sales Tax, Southeast | Permalink


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Regional labor markets continue struggle

Similar to the national employment report for June, the regional employment report showed a loss in payroll employment for the month. According to the U.S. Bureau of Labor Statistics' establishment survey, the Sixth District lost 26,800 jobs in June after adding 77,400 jobs in May (see chart 1). Job losses in most District states were affected by the end of Census-related temporary jobs. For the United States as a whole, 125,000 jobs were shed in June, reflecting the end of 225,000 temporary Census jobs. Private payrolls in the District have increased over the past few months, albeit at a slow pace. In June, the District added only about 17,000 private jobs.


Looking at another labor market indicator, we also see a slight improvement in the sluggish labor market. In the U.S. Bureau of Labor Statistics household survey, June's unemployment rate decreased in all District states except for Louisiana, where it increased slightly that month. Despite the easing of the unemployment rate, all states in the District have unemployment rates above the national rate of 9.5 percent with the exception of Louisiana, which has an unemployment rate of 7 percent. Much of the decrease in the unemployment rate during the past few months is attributed to a decrease in labor force participation.


To gauge employment's short-term trend versus its long-term trend, employment momentum can be examined through the use of bubble charts (see chart 3).

The employment momentum chart simultaneously plots both short- and long-term employment trends as well as states' total employment share. The vertical (Y) axis measures short-term trends (three-month average annualized percent change). The horizontal (X) axis measures long-term trends (year-over-year percent change). The size of each state's bubble reflects its relative share of total employment among the six measured states.

The position of a state's bubble in a quadrant—the intersection of the state's short- and long-term plot—reflects its employment momentum by using four quadrants that indicate certain situations:

Quadrant 1: Both short- and long-term employment growth are positive. (The higher in the right-hand corner of the chart a state's bubble appears, the stronger the state's employment momentum.)
Quadrant 2: Short-term growth is negative, but long-term growth is positive. (Recent data point to slipping employment momentum.)
Quadrant 3: Both short- and long-term employment growth are negative. (The lower in the left-hand corner of the chart a state's bubble appears, the weaker the state's employment momentum.)
Quadrant 4: Short-term growth is positive, but long-term growth is negative. (Recent data point to improving employment momentum.)


In June, the employment momentum of the Sixth District states is positioned in the improving quadrant, so although long-term growth is still negative, short-term growth is positive. Some states were even entering the expanding quadrant in June. If we take a look back to where the Sixth District was in January (see chart 4), all District states were in the contracting quadrant with both short- and long-term employment growth negative. Although these indicators point to improvement, they show that the labor market in the Sixth District still has a ways to go before getting back to where it was prerecession, with state bubbles in the expanding quadrant and lower unemployment rates.


By Sandra Kollen, a senior economic analyst in the Atlanta Fed's research department

July 28, 2010 in Louisiana, Recession, Unemployment | Permalink


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Recession lessons

As business owners and CEOs in the Southeast react to the positive media stories on third quarter GDP, they have also been quick to remind us that while the recession may be over technically, there is still fallout to be dealt with.

Our contacts note that economic headwinds (things like high unemployment, cautious consumers, and uncertainty about commercial real estate, just to name a few) are having an effect on their business decisions, but all is not negative.

On the contrary, companies positioned to ride out a deep downturn like the one we are experiencing are providing a glimpse into how our region's most successful organizations got that way. Here are a few "lessons from the recession" from some of our business contacts:

  • It's great to have access to credit and even better to have access when you don't need it. Many of our contacts have emphasized the importance of maintaining an "emergency fund" for their businesses much like financial planners encourage for individuals.
  • Managers should take advantage of the unprecedented level of talent that is available in the labor market. We hear repeatedly that one of the best places to deploy emergency fund dollars is with new employees who can add immediate value to the enterprise. Some of the stories we've heard paint the picture of highly productive new staff doing the jobs of two and even three staff, and at the same time, challenging other staff to increase their own productivity. Our contacts also note that slow periods provide an opportunity to further develop strong performers in anticipation of deploying more productive and flexible human resources when demand picks up.
  • While many organizations have reduced both staffing and other expenditures, it's been noted by some contacts that even after the "first wave" of cuts, they were able to find additional savings through more creative uses of current resources. The point here is that when conventional wisdom would make one think that there was no more opportunity for efficiency gains, a deeper gaze can identify additional opportunities that will set them apart from the competition.
  • It appears there is a new paradigm for managing inventories at lower levels as compared to the past and that this won't change once the recovery gains momentum. Managers in the best companies will work harder to ensure idled assets are minimized.
  • We have also heard repeatedly about the importance of relationships with both vendors and customers. There is a heightened sense of the importance of knowing whom the organization works with, why they are important to the enterprise, and how the relationship can be strengthened through increased communication and flexibility.

While these are only a few of the lessons our contacts have shared, perhaps it is even more important to recognize that tomorrow's most successful businesses are those that are planning for the future today.

Chris Oakley serves as vice president and regional executive of the Jacksonville Branch. His territory includes all of central and north Florida, including the Panhandle. He and his counterparts in other parts of the Sixth District work to develop networks of individuals with "boots on the ground" who provide economic insight and intelligence to the Federal Reserve Bank of Atlanta. This information supplements the data that are analyzed and used in forecasting, and ultimately, policymaking.

November 10, 2009 in Recession, Southeast | Permalink


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